Twin Disc Turns a First-Quarter Loss Into Profit

The Tip Desk · November 11, 2026 · 3 min read

Sales rose 10.9% to $88.7 million as net income attributable to Twin Disc reached $3.4 million, or $0.24 a share, after a year-earlier loss.

Twin Disc, Inc. (TWIN), the marine and heavy-duty off-highway power-transmission maker, reported sales of $88.7 million for the fiscal first quarter ended September 25, 2026, up 10.9% from a year earlier. Organic sales, which exclude acquisitions and foreign-currency effects, rose 11.8%. The year-over-year pace slowed from 18.3% growth in the fiscal fourth quarter, when sales were $114.4 million.

The company attributed the increase primarily to strength in the Veth product line, expanding defense demand, improved oil and gas demand, and generally strong market conditions. Marine and Propulsion Systems sales rose 14.4% to $55.2 million from $48.2 million a year earlier. Other sales rose 19.5% to $4.6 million.

Industrial sales rose 35.3% to $14.0 million from $10.4 million a year earlier. Beginning in the fiscal 2027 first quarter, Katsa sales previously classified in Land-Based Transmissions moved into Industrial; $4.7 million of revenue that would previously have sat in Land-Based Transmissions was classified in Industrial. Land-Based Transmissions sales fell 14.7% to $15.0 million from $17.6 million a year earlier.

Gross profit increased 10.9% to $25.4 million from $22.9 million in the fiscal 2026 first quarter. Gross margin was 28.7%, consistent with the prior-year first quarter. The company said the margin reflected stronger growth in Katsa and Veth, which operate at gross margins below the company average, partially offset by favorable product mix in Land-Based Transmissions, including higher alternative-fuel unit sales. Marketing, engineering and administrative expense was $20.8 million, compared with $20.7 million a year earlier; the company said the slight increase was driven by inflation in wages and benefits and offset by expense control.

Net income attributable to Twin Disc was $3.4 million, or $0.24 a share, versus a $0.5 million loss, or $0.04 a share, in the fiscal 2026 first quarter. The company said the year-over-year change was driven by an increase in operating income and a decrease in interest expense and other expense. EBITDA was $7.7 million, up 62.6% from the year-earlier first quarter.

Six-month backlog was $190.6 million at quarter-end, compared with $178.3 million at the end of fiscal 2026. Chief Executive Officer John H. Batten said demand remained healthy across end markets and that defense continued as a growth driver, with accelerating order activity from U.S. and European customers. He said Finnish subsidiary Katsa booked significant defense orders during the quarter and that orders tied to the U.S. Navy’s initial unmanned vessel program had begun reaching the order book.

Inventory as a percentage of six-month backlog decreased from 99.9% at the end of the fiscal 2026 fourth quarter to 93.9% at the end of the first quarter. Cash increased 87.7% to $26.7 million versus the fiscal 2026 first quarter. Total debt decreased 9.0% year over year to $39.8 million, and net debt decreased $16.4 million to $13.1 million. Free cash flow was $5.6 million in the quarter. Chief Financial Officer Jeffrey S. Knutson said the company generated that free cash flow and reduced net debt due in large part to disciplined inventory management, despite increased capital expenditures.

Batten said the company continues to prioritize investing in growth, including expansion of its European footprint, continued build-out of manufacturing in Racine, and evaluating M&A opportunities, while maintaining financial discipline to strengthen the balance sheet, enhance free cash flow, and pay down debt. Twin Disc designs, manufactures, and sells marine and heavy-duty off-highway power transmission equipment, including marine transmissions, azimuth drives, propellers, and industrial clutches, to customers in pleasure craft, commercial and military marine markets, as well as energy, government, military and industrial markets.